Gujarat University
MCA Semester II
ACFM
Date: 24th July, 2000 Marks: 50
Instructions:
1. Answer to the two sections must be written in separate answer books.
2. Figures to the right indicate full marks of the question.
Section I
Q-1 Answer the following (any three) [9]
i) Division of Subsidiary books.
ii) State the limitation of ratio analysis.
iii) Distinguish between fixed assets and fictitious assets.
iv) Give debit-credit rule for Nominal A/C, Personal A/C and Real A/C.
v) Whether the following sequence for preparation of final A/C is correct or not? If not, correct it.
Subsidiary Books à Vouchers à Trial Balance à Balance à TransactionsàLedger Book à Adjustment à Final accounts
vi) Distinguish between profit & loss A/C and Balance sheet.
Q-2 The following details are extracted from ledger of XY Ltd. [8]
Trial Balance (As on 31-3-2000)
Debit Rs. Credit Rs.
Investments 15,000 Capital 3,00,000
Opening Stock 37,500 16% Loan 75,000
Machinery 2,10,000 Sales 3,75,000
Furniture 57,000 Commission 15,000
Purchases 2,61,000 Creditors 1,05,000
Debtors 2,02,500 Bank 27,000
Wages 21,000 Goods return 3,000
Carriage Inward 15,000
Carriage Outward 6,000
Salaries 33,000
Printing 13,500
Rent, Rates & taxes 15,000
Cash 12,000
Goods return 1,500
------------ -----------
9,00,000 9,00,000
======= ======
Addition Information:
1. The closing stock was of Rs.48,000 but realize value is Rs.45,000
2. Interest on 16% loan yet to be recorded.
3. Write off Rs.12,500 as bad debts & provide doubtful reserve @10%.
4. Depreciate Machineries @12% & furniture @10%. Prepare the final accounts.
Q-3 Attempt (any three): [8]
a) Define Depreciation and discuss atleast two important methods of depreciation with appropriate illustration.
b) “Ratio Analysis is useless exercise”. Do you agree with this statement? Why?
c) Distinguish between FIFO and LIFO methods of Inventory.
d) Briefly discuss the factors affecting the working capital needs.
e) Write short note on: Gross and Net Working Capital
OR
Q-3 The Summarized Balance Sheet and Profit & Loss a/c of AB are as under: [8]
Balance Sheet as on 31-3-2000
Liabilities Rs. Assets Rs.
Equity Capital 80,000 Land & Building 1,00,000
Gen. Reserve 35,000 Plant & Machines 40,000
Profit & loss A/c 35,000 Furniture 20,000
15% Debentures 40,000 Stock 30,000
Creditors 30,000 Debtors 20,000
Bills Payable 20,000 Cash 30,000
Bank Overdraft 10,000 Misc Expenses 10,000
---------- ------------
2,50,000 2,50,000
====== =======
P & L A/s for the year ended on 31-3-2000
Dr Cr
To opening stock 20,000 By Sales 2,40,000
To purchases 1,10,000 By closing Stock 30,000
To Gross profit 1,40,000
----------- ------------
2,70,000 2,70,000
====== =======
To Adm Exp A/c 30,000 By gross profit 1,40,000
To Sales Exp. A/c 14,000 By commission 20,000
To Depreciation A/c 20,000
To Interest A/c 6,000
To Taxes 30,000
To Net profit 60,000
--------- -------------
1,60,000 1,60,000
====== =======
Calculate the following ratios and comment on each ratio by comparing with industry ratio which is
mentioned in bracket:
i) Gross profit Ratio (45%)
ii) Net Profit Ratio (25%)
iii) Stock turnover (3.5)
iv) Current Ratio (1.5:1)
v) Acid Test Ratio (1:1)
vi) ROI (40%)
vii) Debt Equity Ratio (1.5 : 1)
viii) Debtors Ratio (50 days)
Section II
Q-4 Answer the following (any three): [9]
a) The following transactions occur for purchase and issue of materials:
Jan- 2000 Transaction Units Rate per unit
1 Opening Balance 100 Rs. 4.50
2 Purchased 4000 Rs.4.00
5 Purchased 500 Rs.5.00
10 Issued 2000
17 Purchased 6000 Rs.6.00
19 Issued 4000
24 Issued 1000
27 Issued 2000
29 Purchased 5000 Rs.5.50
31 Issued 3000
From the above particulars prepare the stores ledger account by adopting FIFO method of changing material issue.
b) From the following information determine (i) P/V ratio (ii) BEP (iii) Margin of Safety:
Sales Rs.5,00,000
Variable cost Rs.3,00,000
Fixed cost Rs.1,00,000
c) Compute the weighted average cost of capital of xyz Ltd. on the basis of following information:
Sr. Source of Finance Cost of Capital Book Value Market Value
(%) (Rs.) (Rs.)
1 Long term debt 10 18,00,000 20,00,000
2. Preference Shares 12 4,00,000 6,00,000
3. Equity shares 15 60,00,000
4. Retained Earning 15 20,00,000 1,00,00,000
Tax bracket is 50%
d) Cost price of as machine = Rs. 1,00,000
Installation charges = Rs. 1,00,000
Scarp value Rs. 20,000
Estimated life 5 yrs.
Calculate depreciation for first two years under I) SML ii) WDV.
e) Explain following concept:
i) P/V ratio ii) Margin of Safety iii) BEP
Q-5 a) The following information is extracted from the cost record of James Co. Ltd. You are asked to calculate
Material Cost Variances. [6]
Standard Actual
Type Kg. Price Total Type Kg. Price Total
x 10,000 10 1,00,000 x 11,000 9 99,000
y 12,000 12 1,44,000 y 13,000 13 1,69,000
z 18,000 10 1,80,000 z 17,000 11 1,87,000
--------- ----------- --------- -----------
40,000 4,24,000 41,000 4,55,000
b) Write short notes on (any one): [2]
i) Sales Budget ii) Costs budget iii) Flexible budget iv) production budget
OR
Q-5 With the following data for a 60% activity prepare 5 budget for production at 80% and 100% capacity:
Production at 60% activity 600 units
Material Rs.125 per unit, Labour Rs. 100 per unit
Direct Exps. Rs. 50 per unit
Factory Exp. Rs.60,000 (40% fixed)
Adm. Exp. Rs.80,000 (40% variable)
S & D Exp. Rs. 1,00,000 (50% fixed)
OR
Q-5 Define the term ‘budget’ as used in cost accounting explain what is meant by “budgetary control”. [8]
Q-6 A large sized chemical company is considering investing in a project that costs Rs.4,00,000. Tax rate is
50%. The company uses straight-line method of depreciation and proposed project has cash flows as
follows: (Before Depreciation & tax) [8]
Years 1 2 3 4 5
Cash flows (Rs.) 1,60,000 1,80,000 2,00,000 2,20,000 2,50,000
Determine the following:
i) Pay back period ii) Average Rate of return iii) Net Present value at 15% iv) Profitability Index
at 15%
Discount factors:
0.870, 0.756, 0.658, 0.572, 0.497
OR
Q-6 Explain the following with relevant illustration (any two): [8]
1. Pay back period
2. Average rate of return
3. Net present value
4. Internal rate of return
5. Profitability index
